Female Angel Investors Set To Lose Their High Net Worth Individual Status

January 30, 2024

*Disclaimer: you may have already seen a lot of content on this but we won’t stop shouting about it!*

It’s beyond disappointing that in 2024 we are having to warn female investors that from 31 January 2024, the new definition of high net worth individuals will come into effect and likely have devastating consequences for the female investor network.  

What’s happening?

In order to be able to self certify as a high net worth individual and make investments, potential investors must meet certain annual income and net asset thresholds. Those thresholds currently stand at £100,000 for annual income and £250,000 in relation to net assets.  

However, from 31st January the thresholds will be significantly increased so that the annual income required is £170,000 and the net asset value needed is a huge £430,000 – both having nearly doubled.  

Why does it impact women?  

The impact on women is two-fold. It’s well known and well documented that female founders are being drastically overlooked by Venture Capital funds when it comes to raising investment (another bugbear of ours which we’ll save for another day!) and as a result their main source of investment comes from angel investors and yes, you guessed it, those are mostly female.  

On the flip side, many female angel investors may be just as experienced as their male counterparts but due to the gender pay gap this may not be reflected in their incomes. In addition, gender roles also have a part to play here with female angels more likely to work in “lower paid” jobs than males in order to preserve at least some work/life balance so that they are able to keep up or take on other responsibilities. In addition, some of the rules when looked at holistically just don’t make sense in terms of the risk each potential investor poses and there is a great worked example of this here.  

So, with less female angels qualifying, the pool of investment for many female led start-ups will decrease dramatically. In fact, research carried out by Marla Shapiro of HERmesa Angel Syndicate and Roxane Sanguinetti of Alma Angels showed that based on 2020/2021 earnings, the changes mean there would be huge declines in eligible female investors across the board (more than their male counterparts), and in Northern Ireland and North East England, no female investors would qualify.

Even more shockingly, HM Government (and HM Treasury) has gone ahead with the changes even though the potential negative affect on the female angel investment market was highlighted in HM Treasury’s own consultation response. Diversity is so important in the start-up world and female perspectives should be brought to the table in order to produce well rounded entrepreneurs. This can’t happen if females don’t qualify.  

What can we do about it?  

At Plume our female-founded, all-female legal team understands the frustration these changes will undoubtedly cause to female angel investors, founders, entrepreneurs and business owners.  An open letter to the Chancellor from Startup Coalition and backed by various entities such as the UK Business Angels Association is currently in circulation imploring the Chancellor to reverse the changes for various reasons including the impact on female angels. That open letter currently has more than 1,700 signatures but we can and must do better. We’ve signed, have you?  

Receive our insights directly to your inbox by signing up to our newsletter

Recommended content